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From Executive to Janitor: Some Statistics

By Catherine Rampell March 4, 2009 6:55 pmMarch 4, 2009 6:55 pm

Update | 9:48 a.m.

Last weekend my colleague Michael Luo had an article about executives who take survival jobs. The story specifically looked at the case of Mark Cooper, a laid-off executive who, to make ends meet, has recently taken a job as a janitor.

In economic lingo, this is often called skill-related underemployment — when workers take jobs that they are technically overqualified for, given their experience and training.

How common are situations like these? The best data available on this are, unfortunately, not terribly up to date. But here’s what we do know: As David Leonhardt wrote in his column today, this recession is taking a much higher toll on the less-educated than on college graduates. Research has also found that when the unemployment rate is high, the education levels of new hires within a given occupation are higher, since employers can be pickier about whom they bring on board when more workers are desperate for jobs.

Put another way, high-skilled individuals can usually trade down to a job they’re too qualified for, but low-skilled individuals can’t usually trade up to a job whose qualifications they do not meet. This means high-skilled individuals will probably have an easier time finding a new job if they’re laid off than lower-skilled individuals. That is assuming, of course, that the higher-skilled individuals don’t mind performing work they may have once considered “beneath” them — a stigma they may have to overcome if they want to keep paying their bills.

The most recent numbers available from the displaced worker survey — conducted every other year by the Bureau of Labor Statistics — show that even when the economy is relatively healthy, people laid off from executive positions have trouble finding a job as senior and high-paying as the one they lost.

Between 2005 and 2007, 1,026,000 managers were laid off.

These workers were slightly more likely than the average person laid off during the same period to seek new employment successfully: Of laid-off managers, 69.2 percent had new jobs by January 2008, compared to the overall group of laid-off workers, of whom only 66.6 percent found new jobs.

But the laid-off managers who found new jobs didn’t necessarily find positions that were as good as their previous ones.

Of all the managers laid off between 2005 and 2007, only 34.7 percent found a new job as a manager, according the Steve Hipple, an economist at the Bureau of Labor Statistics. Of the rest, 34.5 percent were re-employed in a different occupation, 20.4 percent were unemployed, and 10.4 percent dropped out of the labor force altogether.

Those who had been working full time as a manager before being laid off also likely took a pay cut when they did find new work. Before being laid off, full-time managers had a median weekly earnings of $1,005. But for the members of this group who found new full-time work (whatever the occupation) by January 2008, their median earnings fell to $813, a drop of 19.1 percent.

This means that, in terms of wages, they fared worse than the typical person who had been laid off between 2005 and 2007 and who found new employment by January 2008. The median weekly wage for all full-time jobs lost during that period was $651. But for those people who found new full-time work by January 2008, the median weekly wage was $626 — meaning a decrease of just 3.8 percent.

This is an interesting statistic. It means that long-term unemployment causes class displacement; i.e., anyone who was in the professional and managerial class has the likelihood of being shifted down to a lower class stratification the longer that the term of his or her unemployment lasts. Since those so shifted are both skilled and educated, resentment as a result of the shift has to build up over time. If enough people are shifted, some kind of social revolt has to occur. Speculation to be sure, but it seems that if the economic and the financial sitution were not to improve for an extended period of time, the USA might well be on its way to national socialism.

It’s all about falling off your track and leaving the network. Some do, who had minimal connections and attained their position with, heh, luck and hard work. But, if you grew up with a lot of family members in high places with friends taking care of your passages and protecting you, then, well, you’ll survive without driving a cab.

Speaking of which, a good corollary is the well educated professional immigrant who, well, winds up driving a cab in America.

nestchick: Things have to change!
we voted for changes… and the markets lower each day, destroying savings – Long term solution ? no, retirees selling mutual funds because there is no dividend… share price at bottom, retirees spend their capital for daily necessities and they talk about long term solution ? what changes are there ? we are duped by an orator

The Affordable Care Act imposes economic burdens that are the equivalent of taxes, an economist writes. Read more…

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